Working a Second Job to Save for Retirement

Working a second, part-time job is a common way to pay down credit card debt or address unexpected bills. But today some middle-age savers are taking a second job for a different reason: to help boost lackluster retirement accounts.

"I see that more and more," says Mike Sena, a certified financial planner in Canton, GA. Sena has multiple clients who are putting the money from a second job into their retirement account because they feel they haven't saved enough to this point.

"For many people, retirement is still ages away and they say, 'I'll have time to take care of it,'" Sena says. But his clients with second jobs are opting to play catch-up in their 40s and 50s in hopes of not having to work past their retirement age.

David Bakke, 45, began working part-time at a restaurant nine months ago with a straightforward savings goal: $500,000 for retirement. Bakke makes $48,000 in his full-time job in the financial services sector, and earns about $1,000 a month after taxes from his restaurant job, which he invests in a mutual fund.

He also contributes 7 percent of his salary to a 401(k) plan and opened a Roth IRA five years ago. He tries to max out his annual contributions to both accounts.

"Working a side job is important to me because my previous level of contributions to my retirement savings would have left me short when I reached retirement age," Bakke says. "I used to simply set aside what I could for my retirement savings and hope that I would have enough money. However, after investigating my situation, I've realized that such an approach was not viable."

Last year he saved $12,000 for retirement. His goal this year is $20,000, which he expects to reach with his current contributions to the Roth, 401(k) and mutual fund. Without the extra job, he calculates that he'd only have about 65 percent of what he needed to enjoy a "decent" retirement.

A divorced father of a 5-year-old son, Bakke says that taking on another job caused other areas of his life to suffer at first, as he was able to spend with less time with his son and almost no time with friends. But he says he's since learned new time-management techniques that give him more free time, which he's written about as a contributor to the site MoneyCrashers.com.

Before retiring, Sena recommends to his clients that they have no consumer debt. He also suggests that they set aside 10 to 15 percent of their income for retirement annually before they consider paying down their mortgage or funding their children's college tuition.

While many retirement savers may be behind on their goals, only a fraction will have the work ethic needed to take on a second job to make up the gap. But for Bakke and others, the peace of mind that comes with a healthy nest egg is enough to make the extra hours worth it.